NEW DELHI: After a break, the rupee resumed its downtrend by falling 29 paise to 67.94 against the US dollar in early trade on Wednesday, tracking mixed cues from Asian currencies.
The domestic currency had closed 3 paise higher at 67.65 on Tuesday on fresh dollar selling by banks and exporters.
The People's Bank of China set the midpoint rate at 6.5578 per dollar, which was higher than the previous fix of 6.5596, and up from the previous day's closing quote of 6.5787. There have been concerns that the recent weakness in the Chinese economy would prompt further stimulus by Chinese authorities, which may weaken the yuan and other Asian markets.
"The reality here is that the panic is really coming due to worries over the real intentions behind policymakers moves on the renminbi and exchange rate. The fact that it has started to truly trade according to a trade-weighted basket, makes it appear like the target is to keep it flat on a trade-weighted basis," said David Mann, Standard Chartered Bank, in an interview to ET Now.
So it will be more volatile on a bilateral basis against the dollar, which has been shaking the market sentiment, Mann added.
On Wednesday, the Korean won declined 0.39 per cent to 1210.60 against the greenback. Malaysian ringgit, Indonesian rupiah and Thai baht fell 0.30 per cent, 0.14 per cent and 0.03 per cent, respectively.
On the flip side, Taiwanese dollar and Japanese yuan added 0.53 per cent and 0.38 per cent, respectivey. Yuan was flat.
There were also concerns over foreign equity outflows, which stood at Rs 6,385 crore so far in January.
"India has done better than other emerging market currencies. The Indian currency is down 7-8 per cent but not the same as other emerging markets. Russia's rouble has fallen 55-60 per cent. The macro fundamentals in India are good and we have a very good central bank. Even if there is some weakness, it will be limited as compared to other currencies," said John Praveen, Pramerica International Investments.
Meanwhile, the International Monetary Fund (IMF) has retained India's growth forecast for the next two years even as it pared the global estimate citing subdued demand and diminished prospects in its latest update of the World Economic Outlook.
The ongoing month has seen Asian currencies falling as much as 3.5 per cent against the greenback. The rupee has declined 2.21 per cent, while the yuan has fallen 1.30 per cent.
Source :economictimes.indiatimes.com
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